Speculation is mounting that former arch-rivals Virgin Media and BSkyB are close to a "sweatheart deal", acccording to MediaGuardian.

It was only a few years ago that James Murdoch, then chief executive of BSkyB, blocked Virgin's takeover of ITV by buying a 17.9% stake. Later, BSkyB stopped supplying Sky1 and Sky News to Virgin.

Now the two companies seem to be on the verge of much closer co-operation. BSkyB is now run by its former finance director, Jeremy Darroch, and Neil Berkett is the pragmatic chief executive of Virgin Media.

If the proposed deal goes ahead, BSkyB will take control of Virgin 1's valuable Freeview slot, giving it a useful toe-hold on the free-to-air platform. Virgin's niche entertainment channels will complement Sky's sports, films and news channels.

A recent Ofcom ruling, forcing BSkyB to cut its wholesale prices to rival broadcasters for Sky Sports 1 and 2, will also form part of the new deal between the two companies.

Virgin is expected to get a long-term deal for the premium content it needs from Sky to drive its cable TV business forward.

Published 28.05.10

BSkyB is said to be on the verge of buying Virgin Media's TV channel business, according to MediaGuardian.

The channels, which include Virgin 1, Living, Bravo and Challenge, are expected to sell for around £150-£160m.

BSkyB is understood to be nearing the end of lengthy negotiations, with a deal expected to be finalised next week.

In a further consolidation of the commercial TV sector, Channel Five is also being prepared for sale by owner RTL.

Gerhard Zeller, RTL chief executive, and Dawn Airey, chairman and chief executive of Five, are understood to have spent recent months talking to a wide range of potential buyers for loss-making Five.